Newsletter: 2023. Refresh. Reset. Rebuild 🍃

Welcome to issue 121: Vitalik Buterin latest on Institutions, Prime Capital essay on Fat Applications <> Protocols, Nic Carter 2022 Status of Proof of Reserves and more...

Welcome to issue 121:

▹ Week's Highlight
▹ Upcoming TC Year in Review by Forefront
▹ Building the Everything app by Zee Prime Capital
▹ Vitalik Buterin Latest Essay on Institution
▹ Status of Proof of Reserves by Nic Carter
▹ Latest on Mainstream Crypto & 2023 Predictions
▹ ... more

--- Let's get into it!

Week's Top Signal

2022 was the year that tokenized communities proved their value. We could not be more excited to continue building in this space in the new year. In the coming weeks, the Forefront team will be releasing a Tokenized Communities Year in Review, covering the major trends and outcomes from last year's developments.

One of the most obvious trends was PFP communities becoming DAOs. 2021 saw thousands of new PFP collections drop, each with their own communities, (and sometimes) mission and values. Most of these communities, however, were left asking, "what comes next?" They were dependent on core teams to continue to build out the ecosystem while the community essentially acted as free marketing.

Meanwhile, tokenized communities like Nouns DAO and Krause House were gaining momentum, allowing tokenholders to fund proposals in line with the community's mission. Funds were being allocated toward community projects, not being hoarded by a core team.

With the launch of ApeCoin DAO, a rough blueprint and new expectation for PFP projects was set. Despite the fact that ApeCoin DAO used an entirely new token for governance, BAYC holders and other Yuga ecosystem members were able to participate in a DAO in a meaningful way, without needing to wait for a core team to push the ecosystem forward.

Many more PFP communities have either began their transition to becoming a DAO or are at least discussing it, and with the rise of new on- and off-chain tools to assist in this transition, we expect 2023 to be that many of the PFP projects who were able to build great brands will truly give power to their communities.

TAKE NOTE
2023 is sure to be the biggest year yet for tokenized communities. Stay tuned for the full Tokenized Communities Year in Review report coming soon!

What's Poppin'

Building The Everything App: Fat Applications vs Fat Protocols. This essay from Zee Prime Capital argues that while the Fat Protocol Thesis has been a solid investment approach until today, it's likely that the application layer will be the "fat" one moving forward. They discuss both appchains and superapps, which we have discussed in depth at Forefront across various essays and newsletter editions. The Fat Application Thesis, according to the team, means that someone will own a monopoly on composability: the UX that is most used to access protocols across the web3 ecosystem. The superapp could eventually become a wrapper for Ethereum and other chains while hosting endpoints for all other future "apps" that become a feature of this superapp. "Even today," they say, "we can think of exchanges as apps wrapping blockchains to allow better UX. Most users need not leave Binance, because so much is accessible from there."

What Even is an Institution? Vitalik begins this piece by presenting a recent alternative political compass proposed by Dennis Pourteaux that argues the most important political divide of our present time is not liberty vs authoritarianism or left vs right, but rather how we think about "institutions": are the institutions that society runs on today good or bad, and is the solution to work incrementally to improve them, replace them with radically different institutions, or do away with institutions altogether? This piece explores the definition of institutions and how they are viewed by various groups of people, and how that may impact their other views (or vice versa). As usual, a very thought-provoking piece from the Ethereum creator.

The Status of Proof of Reserve as of Year End 2022. Momentum around cryptographic Proofs of Reserve is rising quickly. Nic Carter explores the status of this momentum as the year comes to a close. In the last two months, major exchanges Kraken, BitMEX, OKX, and Binance, among others, have all published attestations they call Proof of Reserve, although these don't all grant the same assurances. Coinbase also published a blog post explaining their status as a public company with audited financials and quarterly disclosures. He explores which organizations have made PoR assurances, the method through which they've done so, and what's next for zkproofs as a mechanism for Proof of Reserve. This is a long, comprehensive piece on the state of the industry, and Nic does a great job of gathering the requisite information and framing it accordingly.

Clicks vs Collectors. In this piece for Zora Zine, Jacob Horne outlines a problem we know all too well: clicks are won by capturing as much attention as possible, with no further value required. This means that individuals and organizations are incentivized to grab attention in any way possible to get paid. This leads to the phenomenon of clickbait, where the more shocking, outlandish, and dopamine-inducing the content, the better. The solution? Collecting on the blockchain. Collectors are won by creating a cultural artifact that someone views as important in the current day and potentially more important in the future. This means that individuals and organizations are incentivized to create the most important works possible in order to get paid. This is a game-changing shift in business models for the internet that will have enormous impacts moving forward. Great stuff from Jacob as usual.

Latest on Mainstream... First up, China is launching its first state-backed NFT marketplace, a sign of embrace of crypto after the industry has occupied a legal gray area within the country's notoriously strict regulations. The platform will be run by three state-owned and private entities, including China Technology Exchange and Art Exhibitions China, both of which are government-backed, and Huban Digital, a private company, according to a report by Chinese state media outlet China Daily. The marketplace, whose name translates to "China Digital Asset Trading Platform," will also be used to trade digital copyrights and property rights along with collectibles.

Next, SBF is up to no good... again. Wallets associated with now-bankrupt trading firm Alameda Research were seen transferring out funds just days after the former CEO Sam Bankman Fried was released on a $250 million bond. Soon after, SBF pleaded not guilty and denied having access to those wallets anymore. Shady business...

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Signal Bites

▹ FF Library - New Era for Meaningful Collaboration
▹ Read - What Will Happen In 2023
▹ Opinion - 10 Crypto Predictions for 2023
▹ Crypto - Open Letter to Barry Silbert
▹ Research - Beyond Collusion Resistance
▹ Listen - FF Collective Intelligence Series
▹ Proposal - Sushi Tokenomics Redesign
▹ Cool - NFT Wrapped
▹ Interesting - Nouns Grants Explorer
▹ Discussion - DAOs <> Future of Work
▹ Thread - DAO IN/OUTs 2023

◎ Check out Signal  for daily top web3 social headlines

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The information in this newsletter is not intended to constitute legal, financial or investment advice and should not be construed or relied upon as such. Any opinions reflected are the opinion of the author(s) of the newsletter only and not necessarily of Forefront. Please DYOR.